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December 5, 2011

Electric merger customer deal 'insulting,' EDF says

In its most caustic blast yet against Exelon Corp.'s proposed buyout of Baltimore-based Constellation Energy, the French EDF Group called the combined company's offers to Maryland citizens "insulting" and says the deal will be "harmful to Maryland, harmful to BGE and harmful to consumers." The transaction "fails to meet every standard imposed by Maryland's public utilities law and should be denied," EDF said in a filing Monday with the Public Service Commission.

EDF, of course, is the parent of Electricité de France, the giant utility owned largely by the French government. EDF is a big Constellation shareholder and also shares ownership with Constellation of the company's nuclear fleet. EDF rescued Constellation from being bought by Warren Buffett three years ago, saving Constellation CEO Mayo Shattuck's job. Apparently it expected Shattuck to be grateful. Instead, Shattuck is pursuing a deal that is OK for his shareholders but which EDF fears will harm its interests by burying its U.S. nuclear stake within the much larger combination of Exelon and Constellation.

So EDF is missing no chance to blast the transaction. Exelon and Constellation "persist with the claim that after the merger, BGE somehow will be locally managed and controlled" EDF said in Monday's filing, "despite overwhelming evidence to the contrary." (The whole company would be run from Exelon's Chicago headquarters.) It goes on:

The evidence at the hearing further established that the merger’s so-called benefits for Maryland and Exelon’s commitments to Maryland are both woefully inadequate and totally illusory. Maryland jobs will be lost, Maryland tax revenues will decline, and Maryland’s ability to influence its electric generation facilities will be severely limited.

Also Monday, Constellation and Exelon agreed to boost the commitments that EDF says are woefully inadequate and insulting. See Hanah Cho's story on the companies' promise to build additional generation capacity, including more green power than they had previously talked about. Somehow, however, I don't think that's going to change EDF's mind.

Posted by Jay Hancock at 8:52 PM | | Comments (2)
Categories: BGE/electricity


you commented "Apparently it expected Shattuck to be grateful. Instead, Shattuck is pursuing a deal that is OK for his shareholders "

Seems Mayo has been trying to sell-off CEG/BGE since he was appointed CEO. In my time of employ at CEG/BGE, there was a sub-culture that BGE was inferior to the money-making arms of CEG. But... BGE has a lot of capital to be used as collateral.

Though I am a CEG stockholder and may profit from the sale, I do not feel this would be good for Maryland residents. I voted against this sale at the shareholder meeting. I find the $100 credit insulting to our community... cheap method to buy-off the populace.

I used to cover utilities for an investment company, and Mayo Shattuck was by far the least competent CEO I ever encountered - and let me tell you, you don't need a lot of brains to run a utility.

I'm suprised the guy still managed to keep his job after 2008 - he's a total moron.

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About Jay Hancock
Jay Hancock has been a financial columnist for The Baltimore Sun since 2001. He has also been The Baltimore Sun's diplomatic correspondent in Washington and its chief economics writer. Before moving to Baltimore in 1994 he worked for The Virginian-Pilot of Norfolk and The Daily Press of Newport News.

His columns appear Tuesdays and Sundays.

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